EADS Bullish on Airbus, Raises Order Projection to More Than 400

 - August 13, 2010, 8:33 AM
Improved sales have convinced Airbus parent company EADS to raise production rates for its A320 family of narrow-bodied airliners to 38 units per month by August 2011 and to 40 units by the second quarter of 2012. (Copyright Airbus)

EADS has raised its order projection for its Airbus unit this year to more than 400 aircraft from its previous estimate of between 250 and 300 following a better-than-expected sales showing at last month's Farnborough airshow and indications of further strengthening in the narrowbody market in particular. Late last month Airbus said it would raise the monthly production rate of its A320 series aircraft to 38 per month in August 2011 and to 40 per month in first quarter 2012. The company currently turns out 34 A320s per month and plans to raise that its rate to 36 in December.

“For several months now, we have been seeing a progressive upturn in the global aviation market,” said Louis Gallois, CEO of Airbus parent EADS. “The commercial results of Q2 reflect the picture to some degree. At the Farnborough airshow we and our friends at Boeing both asserted greater confidence in a sustained market upturn.

“This development is especially encouraging in view of our goal of improving profitability in our Airbus unit,” added Gallois. “The progress made in existing programs, particularly the A380 also raises confidence in our profitability going forward.”

Despite the improvements, EADS acknowledged that the A380 continues to weigh significantly on underlying performance and that the A350XWB has exhausted most of the buffer Airbus built into its schedules to meet first delivery in the summer of 2013. 

“At Airbus, good underlying performance of the single-aisle and long-range aircraft is weighed down by the A380 by roughly the same amount as last year, as was expected,” said EADS CFO Hans Peter Ring. 

Gallois added that Airbus delivered “good commercial results” in the first half, collecting net firm orders for 117 airplanes, including an order for 32 more A380s from Emirates. At Farnborough, the company collected firm orders for 133 aircraft, along with memoranda of understanding covering 122. Through the end of June Airbus delivered 250 aircraft, compared with 254 during the same period a year earlier. 

Although still a loss-making enterprise, the A380 program has shown efficiency improvements, with 10 airplanes delivered as of July 30, said Gallois, who expressed confidence that Airbus would deliver 20 of the super jumbos by year-end. “As expected, the program is stabilizing and we are making significant progress on the learning curve,” he said.